1) I think the value of most universities (top universities) is the quality of the students they are able to attract. It turns out that becoming friends with smart and motivated people can be very very helpful. It also turns out that most skills in life are learned on the job - not in school. YC is very similar in this regard.
2) Being a participant in YC in '07 and 12 I can tell you that the value of YC increases as it gets bigger because there are more smart, motivated, and successful people to learn from and be motivated by. Also especially for b2b companies - there are a lot of potential customers - see Gusto.
3) YC has no incentive to increase in size if it can't maintain a high-quality program because top founders only want to participate in a program with other top founders. If we do something that convinces top founders to stay away - then we lose.
4) There is this strange assumption that YC had higher quality founders earlier in its life. I think that assumption is biased by the fact that it takes 10 years to build a successful company and so the breakout successes always look like they are from the distant past.
5) "a large influx of less highly-selected startups" - where is your data to back this up? There are significantly more applications to YC now than 10 years ago. The acceptance rate is significantly lower than it was before.
But ycombinator itself in lots of ways turned out to be a credential network like an old school law firm. Even including early associates becoming promoted to partners, etc.
But the ycombinator application process itself at least still doesn't rely on much if any credentialism.
"When we were kids I used to annoy my sister by ordering her to do things I knew she was about to do anyway. As credentials are superseded by performance, a similar role is the best former gatekeepers can hope for. "
Maybe that is close to the role Y Combinator has ended up with as it expands. Getting a slice of startups that would be persuing the same thing with or without Y Combinator, in exchange for acting as a credential and signal to investors.
But there is a big peer-network component to it too, which is more similar to universities than to law firms. There are sort of semesters and the startups identify by "class year." Though that probably happens a bit a the bigger law firms too. Entering associates get a network out of it even if they don't go on to make partner and end up in government positions or positions at other firms.
It says right in the post - YC's goal is mass production of startups via incubation.
If YC lives up to its potential, I suspect the startups that actually end up going through our accelerator will be just a small fraction of all the ones we've meaningfully helped out in one way or another.
I think this misunderstands how most people learn -- people generally learn much more effectively by "active learning," aka actually trying to do the thing they are learning, and getting dynamic guidance alongside that active process, not canned lecture / video content.
It was, hands down, the best and most important thing our company has done.
And we were profitable before YC began, so we didn’t need it.
The value of getting accepted and how that acts as a filtering mechanism to prime venture firms. The network: YC alumni, investors, executives in the industry, mentors, etc.
In other words, getting into YC will usually: enable you to raise venture capital from the best VC firms far more easily; it'll open doors that you previously likely could not open (especially for newer entrepreneurs); it'll help you with recruiting talented and experienced employees (critical to success); it's a halo, by getting accepted into it, you get to borrow reputation from what YC has built up.
In a year since YC we've more than tripled the team to more than 30 people now, of which again: most have kids. Ultimately for us, the network among other things has been the best part. I would definitely do it again.
That being said, my anecdotal opinion: A weak point for YC is enterprise. If you want additional customers, there are a few big YC companies, but not many. Even then, when we did it, we found some help and still got great advice.
If you sell to startups though, it's actually a great way to get customers.
Something that hasn't really been around long enough yet, but also potential is the new vertical accelerator. Our batch was a bit too early for it, but they are trying to solve real problems these companies h ave.
This is who YC funds. That's like saying it might be interesting for technology companies.
Except YC funds plenty of founders with kids.
It does help to have a low personal burn rate. If you have high expenses, it’s difficult to quit a decently well paying job to start a startup. But that doesn’t have anything to do with YC. If anything, it’s marginally easier with YC backing because at least you can slow down the personal burn.
While this sounds true to an extent, YC can provide more tailored feedback than a university generally does. Most of what one does in university is generic and can be learned through tutorials, but YC can provide custom feedback to a specific startup's situation. (And good educational programs will also focus on providing feedback on individual projects.)
Like many universities, the value of YC to founders is mostly signalling and network. What you actually learn at YC is a minor component of the value (since you could learn most of it just by reading or watching videos)
As YC batches get larger, the signalling value of being a YC company goes down. If everyone is special then nobody is.
As YC batches get larger, I suspect the value of the YC network also goes down. This is maybe a little bit counter-intuitive, but I think a large influx of less highly-selected startups will dilute the network and prevent it from functioning effectively.
Unfortunately YC is not completely aligned with founders here. There is a strong temptation for YC to increase batch size. YC gets 7% of a company for far below market price. So increasing batch sizes makes short-term economic sense. However, if YC increases batch sizes too much and harms its brand, it will eventually break its own model. So increasing batch sizes could be seen as form of spending down the brand equity.
This all hangs on a few premises that may or may not be true: 1) You can't have larger batches while keeping quality constant. 2) YC doesn't directly influence the success of participants that much. 3) If the value of YC drops, good founders will eventually stop applying
I suspect an argument like this has been going on inside YC for quite a while. And the blog post was written by the original founders to try to settle the dispute in favour of the pro-scale faction.